One More Time, GOP Stands for Higher Deficits

March 10, 2011

House Republicans say that "defunding" the Affordable Care Act will reduce the deficit. And it might seem like they are right. H.R.1, the House Republican proposal for financing government operations this year, would take away dollars the Obama Administration had hoped to use for implementing health care reform. It comes to $1.6 billion in all. And $1.6 billion in reduced government spending, presumably, means $1.6 billion in reduced deficits.

Except, well, it doesn't. The Congressional Budget Office has just delivered an estimate of H.R.1's implications for health care spending. And while federal spending would indeed fall in the first year, it would rise in the very next one. By 2021, net spending by the government would be $5.6 billion higher (and revenue would be slightly lower) than it would be if the Affordable Care Act's funding stays intact.

Among the reasons why:

[The Affordable Care Act] and the Reconciliation Act established several initiatives--such as quality initiatives, steps to reduce hospital readmissions, and changes in the delivery system for health care that will be tested and implemented by the Center for Medicare and Medicaid Innovation--that involve significant research and development activities before the savings from those initiatives can be realized. Delaying or reducing work on those research and development activities for the rest of fiscal year 2011 would delay the realization of expected savings. In addition, regulatory development for some initiatives--such as establishing a new regulatory pathway for approval of biological products that are highly similar to or interchangeable with their brand-name counterparts--would probably be delayed.

In other words, the Affordable Care Act's changes to the delivery of medical care will likely save the government money. If the administration can't implement those changes as quickly, the savings will take longer to materialize.